Republicans claim near-total power to cancel minimum-wage raises

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GOP gubernatorial hopefuls Jeff Johnson, Dave Thompson, and Kurt Zellers, who would all suspend or repeal automatic mininmum-wage hikes, debating at the 2013 Minnesota State Fair.

This is one in a series of articles funded by a grant from the Northwest Area Foundation.

To suspend, or not to suspend — that’s the question facing future Minnesota governors and their administrations. Should the state’s minimum wage automatically adjust to inflation each year?

Under the DFL deal to raise the state’s minimum wage to $9.50 per hour with an inflation index starting in 2018, Minnesota’s Commissioner of the Department Labor and Industry can suspend indexing the wage for up to 12 months — if leading economic indicators point to a “substantial downturn in the state’s economy.”

At least three Republican gubernatorial candidates — Kurt Zellers, Dave Thompson, and Jeff Johnson — assert they have near-absolute power to stop indexing annually, if elected. One economist says forecasting is uncertain enough to make that possible. If so, indexing would effectively disappear during GOP administrations.

The bill delegates indexing’s annual fate to the labor commissioner, but Gov. Mark Dayton notes that appointee “works for the governor and serves as an at-will position. The bottom line is the governor has the prerogative to make that decision.”

None of the other 11 states in the nation that index their minimum wage to inflation give the executive branch authority over its fate. In all but one of those states, voters approved indexing at the ballot. An experienced constitutional lawyer says the legislature delegating away minimum-wage decisions invites a court challenge.

Dayton will sign the minimum-wage bill Monday.

Open for interpretation?

Indexing supporters hoped automatic inflation raises would finally take the politics out of the minimum wage debate.

Negotiators inserted the suspension provision at the end, hoping to quell rural and suburban DFL senators’ concerns that a $3.35-an-hour wage hike plus indexing would hurt their Main Street businesses.

DFL Rep. Ryan Winkler, who led the indexing charge, said the language was drafted to make any suspension decision more objective. Before suspending the wage, the commissioner must:

Consult with the commissioner of the Department of Management and Budget.

Survey “leading economic indicators,” including but not limited to projections of gross domestic product (from the U.S. Department of Commerce), the Consumer Confidence Index (from the Bureau of Economic Analysis) and seasonally adjusted Minnesota unemployment rates.

From that data, find the “potential for a substantial downturn in the state’s economy.”

Hold a public hearing with proper meeting notification at least 10 days prior.

Allow interested persons to submit written comments to the commissioner before the public hearing and for 20 days after the public hearing.

“They would have to go through the process we laid out in the bill,” Winkler said. “They would have to actually make some findings related to economic conditions and I think it’s pretty clear that it’s only permissible if the economic circumstances warrant it, not political desire.”

But University of Minnesota labor economist Aaron Sojourner says basic economic forecasting is “inherently uncertain” and there’s a lot of judgment that goes into interpreting the data.

The bill is “not setting a bright-line standard, that is, everyone can look at it and say ‘yes’ or ‘no,’” Sojourner said. “This is empowering a government official to make that discretionary judgment. Hopefully it’s an informed and intelligent decision, but it’s still at their discretion.”

Sojurner, however, is not a lawyer. Attorney Charles Nauen, who regularly represents the DFL Party, said Republican candidates for governor should be wary of the 2010 unallotment case. That year, the state Supreme Court found it was unlawful for Gov. Tim Pawlenty to make unilateral cuts to the state’s budget.

“The lesson of unallotment is: if you are going to do something you better follow the rules, you better follow the procedures in place,” Nauen said. “These procedures in the minimum wage statues are pretty specific. They do give some judgment to the commissioner, but only after they set up public notice and allow a public hearing and rely on the features of the statute.”

Still, the provision may itself not be constitutional. Attorney Erick Kaardal says there are questions about delegating legislative duties without specific enough guidance.

“It seems to be something that raises constitutional questions on first impression. The Legislature has never actually delegated minimum wage or even indexing to the department,” said Kaardal, who has made a career out of litigation over state government issues. “Here you have a definite shift, a new thing that’s never been done before.”

GOPers would suspend

A handful of Republicans running for governor also say there’s a lot of room for interpretation in the soon-to-be law.

Zellers, a Maple Grove state representative, said he thinks indexing is bad policy and he would get rid of it if he ran the state. “You can consult your commissioners all you want, I think that’s what they are there for, to be your experts in that particular field, but the authority and the responsibility rests with the governor, not some nameless, faceless commissioner,” he said.

If he had to jump through the bill’s hoops, Zellers says, “You could bring in an economist from the University of Minnesota or from St. Thomas. It’s just like lawyers when it comes to economists — you can get a lot of different opinions based on either their philosophies or their teaching experience.”

Lakeville Sen. Dave Thompson, also a Republican gubernatorial candidate, agrees that the bill’s language is vague and interpretable. “There’s the old saying: ‘A recession is when your neighbor is out of work and a depression is when you’re out of work,’” Thompson said. “What’s a significant economic downturn?”

He doesn’t believe legislators should give that power to the executive branch, but if the law granted him the privilege, Thompson said he would suspend indexing for the entirety of his stay in the governor’s mansion.

“I think the governor would have to have some justification and obviously they are going to call for public testimony and witnesses,” he added, “But ultimately it ends up being within the discretion of the governor, and I don’t believe that’s discretion the governor should have.”

As governor, GOP candidate and Hennepin County Commissioner Jeff Johnson said he would try to eliminate indexing legislatively first, but he wouldn’t hesitate to use authority legally designated to his administration .

“It sounds like there’s tremendous latitude, which is not good policy,” Johnson said, adding pay raises “shouldn’t be automatic and it shouldn’t be left up the political whims of a governor.”

Nauen contends this sort of campaign rhetoric could cost a GOP governor in court. “The increases can’t be suspended for a political reason and political reasons alone. That would be arbitrary. You have to follow the rules — that’s the lesson of the unallotment decision.”

A backup plan

Winkler said he went back-and-forth with minimum wage negotiators over possible ways to tighten up requirements for the commissioner, but each time they tried to specify certain data points or put in specific numbers to trigger an action, the proposal got too complicated.

“We did leave some discretion in there,” he said.

That’s why Winkler also included an “accelerator” in the bill — allowing governors to not only reinstate indexing after a suspension, but also catch the wage back up to where it would have been had inflation adjustments been made the whole time.

“If you’re that Republican so committed to not giving people a wage increase,” Winkler said, “a future Democratic administration can just make it up.”

So these GOPers aresaying they would spend four years in office telling Minnesotans that the economy sucks (or at least, is in imminent danger of collapse), in order to avoid increasing the minimum wage…

Do I think a 16 year old working at McDonalds is worth $9.50? No. Do I think an adult can live on $9.50? No. I think raising the minimum wage will help a few older people who earn min. wage and it will cause businesses to hire less young people since they generally are not considered to be as hard working as more experienced workers. As it stands, there are seemingly few jobs available for my 16 and 19 year old. Every job I worked from the time I was 12 until I graduated from college is now being done by illegals or adults that have found themselves trapped by lack of opportunity. This is a terrible time in America to be young and have dreams. Debt, lousy education system, few jobs for young people. The future is not bright unless, like Amy and Al, you have your Ivy league degree.

16 year old kids that are worth $9.50 an hour and more. Ironically enough, I’ve met and worked with more adults holding MBA’s that weren’t worth the original $6.15 per hour that the new wage is replacing.

There may not be a lot of jobs for young people today, but where’s the initiative to go out and hustle for work? When was the last time you had a kid knock on your door to see if they could shovel you walk or do your yard work.

If they claim the economy is heading down, then either it does–or it does NOT. If it does go down, then they were right. But if it does NOT go down, then citing the fact they were WRONG is proof the minimum wage needs to be indexed up TWICE (for two years) because the past year was wrong AND the next year also needs to be indexed up because of documented failed GOP economic predictions.

Let me guess. Something along the lines of 6million jobs created or saved? Aside from some disputed outliers, the literature is relatively clear on the subject: Raising the minimum wage reduces employment over the long term. Indexing it to inflation, because, “Businesses deal with increasing expenses all the time,” –yes, *you* voted for that shining beacon of intellectual brilliance– will only exacerbate the trend.

But then again there has always been a special level of economic understanding from our friends on the Left. Capital is free (and evil, never forget evil). Businesses are endless money pits. Expenses and taxes don’t matter (except when it comes to sin taxes, of course).

There are just as many studies which say that raising the minimum wage has zero impact on long term employment as there are studies which say it does.

Meanwhile, may of our “conservative” friends don’t seem to realize that this is a justice issue. It is unjust that ANYONE should be placed in the position where, even though they’re working as hard as they can at whatever job they can find, they still can’t feed themselves and their family members.

It is EQUALLY unjust to worry more about business owners, investors, and managers, than their workers. Workers are real, actual, human beings who have as much right to happy, prosperous lives as do their bosses.

As long as our “conservative” friends continue to cast their lot with business owners, investors, and managers who are only a very small minority of the population, they will have a difficult time winning the support of workers who, with very few exceptions, are currently paid as little as possible, and routinely have their wages and well being stolen by that small minority.

“they will have a difficult time winning the support of workers who, with very few exceptions, are currently paid as little as possible,”

Greg,
When you pay for products and services:
– Do you try to find and buy the higher cost offering?
– Look for the best value for the cost? Maybe by shopping sales?

And just for the guys…
Do you work to find high content American goods, and pay a little more so that American workers reap the rewards of your expenditure?
Do you make sure that roofing company only hires legal American citizens?

Just curious… If you look for a good value, what is your rationale that companies should do otherwise?

I also tip well too. The being the search for “value” by companies is just a pleasant sounding cover for the efficiency worshipping race to the bottom that would leave workers as unpaid serfs if allowed to run to its natural conclusion (see the Guilded Age, Victorian England, et al) A question in return, is efficiency always a good thing? If so why?

As good stewards of our invested money, Companies are responsible for maximizing profits. (ie Return on Investment) They do this by meeting or exceeding the customer’s requirements (provide value) for the least sustainable cost. If the customers primarily value cost, quality, features, functionality, reliability, etc, and are indifferent to the “Domestic Content Level” we get what we have today.

If customers keeping rewarding companies, products and services that use or produce with foreign workers… They will keep using them.

I would contend its the reverse. The goal of these companies, actually capitalism as a whole, is to reap profit by supplying as little value as is possible while receiving as much payment in return as possible. Its the underlying inequality inherent in our economic system, the big con if you will. If any attention is paid to the equity of the exchange at all we would cease to be capitalist and would simply be operating a modified barter system. The reason I bring up efficiency is to underscore this truth, if efficiency were rewarded as some greater good it might be worthwhile, however the only outcome of efficiency, in the workplace at least, is greater rewards for the top of the food chain, and continued erosion of the rewards for the bottom, to the point of elimination when they’ve produced themselves out of work. Makes perfect sense if you favor a law of the jungle manner of lifestyle, not so much when one would like a cohesive society.

That in a world where no one knows the true value of any product or service that its in any companies interest to provide anything close to equity in value for the value received from the customer. You talk about competition, from the consumer end all that is known is the value received relative to the competition, not the value received relative to the actual cost to the provider for the good or service. Its the libertarian myth of perfect information, that the consumer has any real influence on pricing across an industry through choice. Deciding to consume based on competive value assessments at best provides you the opportunity to take advantage of the least onerous of many bad offers. The same applies to the employment market, there’s a reason conservatives fight so hard against wage transparency. They know that if wage earners realize that despite the clarion call of “competition” most businesses across an industry pay basically the same wage, that the fix is really and truly in, that they might wake up and understand what really is in their best interest.

Value received has nothing to do with cost. If the margin (price – cost) gets too lucrative/big, more competitors enter the market or offer an alternative.

“libertarian myth of perfect information, that the consumer has any real influence on pricing across an industry through choice”
You have got to be kidding… What do you think happened to Palm, Blackberry, etc?
No sales, No margin… No margin, No R&D / Company…

“businesses across an industry pay basically the same wage”
Similar jobs and qualifications yield similar pay…

Regularly make light of my belief that American consumers are ~50% of the causation for the problems faced by the American workers. Since they selfishly, like those terrible companies, shop for products and services that give them the best value at the lowest cost. Seemingly indifferent to if it helps or hurts the American workers.

Perhaps I am wrong, but haven’t we had and do we not now have a “government-set minimum wage” at the state and federal level? Doesn’t “minimum wage” legislation go back to the “New Deal” era under Roosevelt?

Find some fool with nothing better to do than raise futile challenges to well-established jurisprudence (and enough money to pay the sanctions that will be levied against him) and go to town.

You remind me of the tax protesters who are convinced that, one day, the courts will accept their argument that the Sixteenth Amendment is a nullity because Ohio wasn’t really a state. These are the other people who don’t let reality slow them down.

Doesn’t matter for Mr.Tester as any non-conservative position, taken at any time in history, by the Supreme Court was only as a result of illegitimate, activist justices. This renders any decision he disagrees with invalid in his mind. Certainly a convienent, if somewhat ineffective, mindset when debating political rhetoric and policy decisions .

set the price for a loaf of bread, why should it be able to set the price for an hour of labor?

I recognize that the education you people receive today doesn’t prepare you to consider other logical, yet constitutional arguments on economics and other factors in our society. What’s convenient is your mindset that doesn’t require you to think at all but just to accept what your unionist teacher poured into your skull.

To tell that to my civics teacher, he was a died in the wool conservative. Granted I’m not sure he’s alive it was 17 years ago or so. I was really hoping you’d play the whippersnapper card or something, but I guess the usual anti education screed will suffice.

Republicans, the party that refuses to follow laws once their passed. What’s interesting is political incompetence. They keep going into elections thinking that they’re winning on these issues. The parties are flip flopping again. I’m not complaining but it’s going to get to the point where no matter how bad the Democrats screw up the republicans will manage to snatch defeat out of the jaws of victory. Republicans are stuck in debate mode, when their arguments fail or collapse they just start over again. That’s no going to appeal to more than 10% of their hard core base.

“About 41 percent of Minnesotans said they would like to see the current wage floor jump to $9.50 an hour and 28 percent said they would like it to go up to $7.50 an hour. A quarter of Minnesotans said it should remain where it is.” Star Tribune.

Based on the results, it looks like 53% wanted it unchanged or only raised to $7.50. And 41% wanted it raised to $9.50.

So the DFL went for $9.50 with inflation adjustment.

Maybe the GOP is on the side of the majority on this one. Especially if folks starts seeing their prices going up, their jobs going away, hours being cut or service getting worse..

It doesn’t make any difference to the average taxpayer what then minimum wage is, they are going to pay for it one way or the other. The current minimum wage is 12,792.00 per year. That would qualify almost anyone for some type of welfare assistance. If they raise it not as many would qualify, but prices might go up. Either way the taxpayers pay for it, either through some type of welfare or increase in prices.

We all pay when the costs/prices go up, including lower income folks and fixed income retirees. Whereas the entitlement / subsidy programs are paid from Income Tax receipts. (ie only people who pay income tax.)

So we just passed a law to raise the wages of teenagers and some adults, at the cost of many people who can not afford the cost increase. It is an interesting situation.

Parents with kids make up a very small percentage of those in the income group. (see other comment for links) Which means the majority are either younger or have not had children yet. Maybe they like the low stress flexible jobs while they are going to school. Or maybe it is a second job.

I wish we had dat about where they live. $7.50 in the Twin Cities is a lot different than $7.50/hr in Fergus Falls.

This leaves me wondering if many of those to impacted by the Min wage law are students who value the flexible hours of many of these jobs? And why are Moms and Dads such a low percentage, could it be that Parent’s make better employees? They commit to the job to support their family?

That they’re making the responsible choice NOT to have kids they cannot afford, you know, the choice those on the right claim they won’t make because all the poor are interested in is reaping “free stuff” from the government. Frankly I think its just a cultural shift, at least for a lot of younger folks. We didn’t have our first until we were in our 30’s, we simply coukd not afford child care until then. Anectdotally, I am only aware of 2 couples in our “group” who had children in their 20’s, I find it interesting they are quite socially conservative, far more so than the rest of our friends.

You could be correct, however most folks can afford childcare if they choose for one of the Parent’s to care for other kids for a fee. Either as a licensed in-home daycare provider, or caring for the children from just one family. It is a bit hectic, however it pays significantly better than min wage.

The other options of course are that the spouses work different shifts, or one spouse has 2 jobs… I have family members and other acquaintances who have used one or more of the options above.

The 2 socially conservative couples choosing to have kids earlier makes sense to me. Their priorities are likely different from others in your peer group.

Your idea that someone can just ‘start a daycare’ is pretty absurd, as it ignores all sorts of real-life scenarios; for example, a licensed, in-home daycare provider may be cheaper than a daycare center, but if the daycare provider is sick, then you have no option BUT to stay home with your child, and then you miss work, and don’t get paid your wage for the day. Starting a new business in an already saturated market, when you are already dealing with young children or infants and don’t have any capital to draw upon is also a steep hurdle to overcome.

I say this as someone who has a child, in daycare, and who has worked on average 40-50+ hours per week since graduating college, and who is married to someone with a masters degree and who is also gainfully employed, that we are choosing, at least currently, to not have a second child, as we cannot afford it and maintain the quality of life that we want to give to our children. I think this all has more to do with massive wage stagnation over the past 30 years than anything else.

They eschewed family planning and lived with the results. As for your scenarios above, start a day care? Really? Sort of tough in housing provided by one small income, that and a rather large assumption that one is suitable for such a demanding line if work simply because they feel like it. Certainly demeans the thousands of trained professionals in the field. As for alternate shifts, more power to you, in my experience, those who have tried it either A. Stopped shortly thereafter, due to marital stress or B. Didn’t remain married due to the same.

Folks here believe everyone is worth at least $9.50/hr, no matter their work ethic, qualifications, difficulty of the job, etc. I have faith that many people could handle providing child care, though it does take someone with a lot of patience and love to share. (a spouse who is proficient at fixing things also helps…)

The interesting thing about early child care is there are many varying goals. Some parents just want safe and nurturing. Some parents demand highly educational and structured. Therefore there are customers for all levels of care providers.